Rising Treasury Yields Test Stocks as Oil Keeps Inflation Pressure Elevated

Stocks are starting the week under pressure, with higher oil and rising Treasury yields weighing on the S&P 500 before both began easing from their early highs. The bigger question is whether the U.S. 10 Year Treasury Yield can stay below its major resistance zone, because oil, yields, equities, precious metals, and even Bitcoin are all reacting to that same macro pressure.

In One Minute

The S&P 500 Index (SPX) remains technically bullish above 7,575 and has broken out of a bull flag, but the U.S. 10 Year Treasury Yield (US10Y) is now around 5.215% and approaching critical resistance at 5.25% to 5.27%. West Texas Intermediate Crude Oil (WTI) nearly reached $100 before pulling back toward $97.50, and that retreat helped yields ease and stocks recover. Gold and silver have both broken important support structures; Bitcoin remains comparatively strong, and this week brings PCE inflation data, Micron earnings, and the nonfarm payrolls report.

The Setup

The main relationship I am watching is simple: oil pushes inflation concerns, inflation pressure affects Treasury yields, and higher yields put pressure on stocks.

The U.S. 10 Year Treasury Yield is around 5.215%, up about 5 basis points. The major resistance zone is 5.25% to 5.27%, coming from a much larger trend line connected to the July 2006 and June 2007 highs. As long as yields remain at or below that area, I still have room for yields to pull back and equities to continue higher. If that resistance breaks decisively, the door opens toward 5.5%.

The S&P 500 remains above my neutral line at 7,575. It has also broken out of a bull flag and completed a retest, so the technical structure remains bullish unless that setup starts failing. S&P 500 E-mini futures (ES1!) were down roughly one-third of 1% early in the session, but they began recovering as oil and yields came off their highs.

Now we add the economic calendar. PCE inflation data arrives Wednesday, nonfarm payrolls arrive Friday, and Micron Technology, Inc. (MU) reports Wednesday after the close. The market wants economic growth strong enough to support earnings, but not so strong that inflation and employment data push the Federal Reserve toward more tightening. The question is whether we eventually get one rate increase in October or December, or whether stronger data creates the possibility of increases at both meetings.

What Changed

West Texas Intermediate Crude Oil (WTI) nearly reached $100 per barrel before pulling back toward $97.50, with the daily price around $97.68. Oil had jumped after President Donald Trump rejected an Iranian proposal, while talks were still expected to continue. (Reuters) What matters for markets is what happened next: as oil pulled back, the 10-year yield also eased, and S&P futures began recovering.

Gold Spot U.S. Dollar (XAUUSD) is showing real technical damage. Gold is down about 3.2% and has broken below the lower boundary of its ascending structure. The first thing I want to see is whether gold can recover the broken trend line around $4,250. If it cannot, support sits around $4,125 to $4,100. Losing that area opens a possible move toward $3,900 and change. The much lower $3,500 area is not my primary expectation, but it becomes more relevant now that major support has broken.

Silver Spot U.S. Dollar (XAGUSD) is dealing with a similar breakdown. Silver is trading near $61 after breaking its ascending support structure, which opens the possibility of a move toward $55. There is also the possibility of a deeper retracement back toward the area where the larger breakout originally began before another major move higher develops.

Natural Gas Spot (NATGAS) is different. Natural gas had a very strong move higher and then gave back a large portion of that rally. Price is now back inside an important technical zone created by previous high pivots. Those earlier moves above the zone never produced a confirmed breakout, so I am watching closely to see whether buyers defend this area and turn it into a viable long setup.

On the technology side, NVIDIA Corporation (NVDA) is trading higher after announcing an additional $170 billion in share buybacks. The company is valued around $5 trillion, so the number is smaller in relative terms than it first appears, but it was enough to move the stock higher.

Technically, the first upside area is the remaining gap around $236 and change. NVIDIA previously came very close to filling that gap without completing it. If price gets through that area, the next important resistance is the upper trend line around $260, depending on where price reaches the line. That higher trend line is the more interesting short setup.

Micron is one of the most important AI-related names this week because of Wednesday's earnings. The big question is memory pricing. If memory prices are peaking and management signals weaker conditions ahead, Micron has meaningful downside risk. Strong guidance could keep the near-term momentum going.

On the upside, I am watching the major gap fill, which also lines up with the 0.786 Fibonacci level. If Micron rallies into that gap before earnings, I would be watching closely for a pullback after the report. On the downside, the first major technical support is around $975, supported by earlier low pivots, the gap structure, and the previous support area.

MongoDB, Inc. (MDB) is down more than 23% after the announcement that its chief executive officer is stepping down, even with guidance being reaffirmed. The stock is around $314, and the major technical level below is approximately $294. That area has acted as a pivot low several times. If the stock flushes lower toward $294, that becomes the area I want to watch for a potential day trade rather than chasing the decline simply because the stock is already down more than 23%.

Digital Assets and Crypto

Bitcoin U.S. Dollar (BTCUSD) is pulling back, but technically it still looks healthier than gold or silver.

Bitcoin has broken above a major former resistance area that rejected price several times. That former high pivot now becomes the important support zone. What I want to see is a pullback into that breakout area, buyers stepping in, and then a strong move away from support. That would confirm that former resistance has successfully become support.

This matters because Bitcoin spent much of the previous year in a much weaker technical condition. The structure is improving, but it remains dependent on that breakout area holding. Bitcoin and the S&P 500 are currently showing similar behavior, with both holding above important breakout structures, while gold and silver are doing the opposite by breaking established support.

Why It Matters

This market is giving us a very clear chain reaction. Oil influences inflation expectations, inflation expectations affect Treasury yields, and yields influence equity valuations.

That is why the 5.25% to 5.27% zone on the 10-year yield matters more than a normal resistance level. If yields fail there and pull back, stocks get breathing room. If yields break through and move toward 5.5%, the pressure on equities becomes much harder to ignore.

At the same time, gold and silver are warning us not to assume that every traditional inflation or hard asset trade has the same structure. Bitcoin is holding up better technically, natural gas is testing a possible opportunity zone, and individual technology stocks are producing their own setups around gaps, earnings, and major support levels.

Key Levels

The two levels controlling the broader picture are 5.25% to 5.27% on the 10-year yield and 7,575 on the S&P 500. If yields stay contained while the S&P remains above 7,575, the equity structure stays constructive. If those conditions reverse together, the risk changes quickly.

Bull Case

For stocks, I want the 10-year yield to remain at or below 5.25% to 5.27% and begin pulling back while the S&P 500 continues holding above 7,575. Continued weakness in oil from the nearly $100 area would also reduce some of the inflation pressure that has been pushing yields higher.

Gold improves if it can reclaim roughly $4,250. Silver needs to recover its broken ascending structure. Natural gas becomes more interesting if buyers clearly defend the current pivot zone.

Bitcoin remains constructive if its former resistance area holds as support and price produces the strong move higher that should follow a successful retest.

NVIDIA can continue toward roughly $236 and change, then potentially toward the upper trend line around $260. Micron can maintain its momentum if earnings and guidance remain strong enough to support the AI and memory pricing story.

Bear Case

The biggest macro risk is a decisive breakout in the 10-year yield above 5.25% to 5.27%. That would open the possibility of a move toward 5.5% and increase pressure on equities, especially if oil remains elevated.

Gold failing to recover $4,250 keeps $4,125 to $4,100 in play. A break below that support opens $3,900 and change, while $3,500 becomes increasingly relevant if additional support continues to fail.

Silver's broken support leaves room toward $55 and potentially toward the larger former breakout area. Bitcoin weakens if the former high pivot fails to hold as support.

Micron has downside room toward approximately $975 if earnings produce a selloff. MongoDB can continue toward the major $294 pivot if the current decline extends.

What to Watch Next

Wednesday is important because PCE inflation data and Micron earnings arrive on the same day. The Bureau of Economic Analysis has Personal Income and Outlays for August scheduled for September 30, and Micron has confirmed its fiscal fourth quarter earnings call for September 30. (Bureau of Economic Analysis)

Friday brings the September Employment Situation report, including nonfarm payrolls, which the Bureau of Labor Statistics has scheduled for October 2. (Bureau of Labor Statistics)

Between those events, I am watching the 10-year yield at 5.25% to 5.27%, oil around the recent nearly $100 area, the S&P above 7,575, whether gold and silver can repair their broken structures, and whether Bitcoin successfully holds its breakout zone.

Bottom Line

The market still has a bullish equity structure, but the U.S. 10 Year Treasury Yield is sitting directly below the level that can change the entire setup. If 5.25% to 5.27% holds and oil continues cooling, the S&P 500 has room to stay constructive above 7,575. If yields break higher, stocks face more pressure while gold, silver, Micron, MongoDB, and the other weaker setups become increasingly sensitive to their next support levels.

There is no reason to chase any of it. Let price reach the level, let the reaction confirm the setup, and then make the decision.